Chesapeake Operating, Inc. v. Nabors Drilling USA, Inc.

RICHARD H. EDELMAN, Justice,

dissenting.

Of what use is a principle of law if no one can be certain, or even confident, of its meaning? How can people obey it? How can businesses enter into contracts to which the law applies with any expectation that they will be enforceable, let alone profitable? If the meaning of a law is uncertain, is it law at all?

This case involves a single sentence of a contract, the plain meaning of which is simple and undisputed. Yet, because our courts choose to apply the provisions of the Restatement on Conflict of Laws to determine whether that choice of law sentence will be given legal effect, the time and resources for extended litigation and over fifty pages of en banc opinions of this court have had to be expended so far just to give the parties a deeply divided en banc decision as to whether that one sentence of their contract will be enforced as they agreed in this instance. Because of reliance by the courts on the Restatement’s method of weighing interests, policies, and relationships, successive court decisions over the years have done little to make the resolution of this issue more uniform or thereby lessen the need for litigation over it.

Ultimately, the interests to be balanced are straightforward: contracting parties’ right to choose the law governing their transactions versus states’ sovereign right to govern business activities conducted within their boundaries. The Restatement approach allows these respective interests to carry greater or lesser weight in different contexts depending on the circumstances (and thus practically assures that courts will reach inconsistent results). But should they? If a state has the sovereign power to govern contracts pertaining to some activities conducted within its boundaries, how and why does it not have that power over all activities conducted within it (that are not governed by federal law)? Moreover, to the extent that the legislative body and courts of a state have promulgated the laws to be followed in that state, how can the courts of another state presume to decide, as the Restatement method contemplates, that some of those laws are important enough to be enforced with regard to activities in that state, but others are not? And why is adherence to the Restatement approach so essential that such uncertainty in the law, and thus a lack of law, is tolerated to perpetuate it?

To be sure, the uncertainty surrounding this issue is completely the contracting parties’ doing. As reflected in the majority and other dissenting opinions in this case, the Restatement provisions essentially provide that the choice of law made by the parties will be honored unless there is a more compelling reason to apply the law of the state where the problem arose. Obviously, if parties want certainty, they can simply specify that their contracts will be governed by the law of the state in which the event giving rise to the indemnity obligation occurs. The Restatement provisions will rarely, if ever, override that choice of law. Therefore, it is only because parties wish to gamble on selecting the law of a different state that uncertainty is encountered. But should we allow parties to repeatedly deplete public resources to decide this wager for whichever of them happens to be benefitted by it in each particular case? And should such an involved decision-making process be continuously conducted only to reach inconsistent and thus arbitrary determinations? Surely, the Restatement method is not *201 really the best that we, as judges, can do with such a fundamental and pervasive question. If we cannot decide that the law of each state governs all, and not merely some, of the activities conducted there (that are not subject to federal law), then we can at least devise an approach that produces some other predictable result so as not to continue to tie up the courts with this issue.